Though I resigned from my Ministerial post, I had no intention initially of leaving the government. But even within a month of the new government taking office, there were reasons for grave worry.
No concern at all was evinced with regard to the solemn commitments in the manifestos. The 100 day manifesto, drafted after so much careful discussion, was almost completely ignored. Maithripala Sirisena was indeed sworn in on the 11th, but Ranil Wickremesinghe was sworn in at the same time, not on the next day with the Cabinet as pledged. The Cabinet, slightly larger than pledged and composed predominantly of UNP members, without representation of all parties in Parliament was sworn in on the 13th. The National Advisory Council, renamed the National Executive Council, was again constituted late and did not have representation of all members of Parliament. It soon ceased to function, with the Code of Conduct for Members of Parliament which it had entrusted to the Leader of the JVP swiftly forgotten.
Nothing was done about the pledge to amend Standing Orders on January 20th, and it was only because I already had a motion to amend Standing Orders on the table that this was taken up on the 29th. I realized then that the UNP in general was clueless about the whole business, but its membership at large was not obstructive. Lakshman Kiriella, the Chief Whip, let me move my motion, and the Committee on Standing Orders met the following month. We accomplished much, but then Ranil stepped in and imposed a delay until his proposal to set up Consultative Committees was drafted. That this was a ploy became clear when his chosen instrument for this, Priyani Wijeyesekera, told me the draft was ready but he had told her to hold it back.
I did finally persuade the Speaker to have another meeting, and the former Leader of the House, Nimal Siripala de Silva, now Leader of the Opposition, attended and we reached agreement on many issues – but then Parliament was suddenly dissolved, contrary to the promise the President had made to his Parliamentary group, and then reaffirmed to Nimal Siripala just a day or two before. How he was dragooned into doing this, contrary to the advice of his own consultants, is another story.
The process of abolishing the authoritarian Presidential system began soon enough, but without consultation, with the primary aim of those entrusted with the task being to abolish the Presidency altogether. And in their concern for this, they forgot the equally important pledge, to set up on January 28th an al party committee ‘to put forward proposals to replace the current Preference Vote system and replace it with a Mixed Electoral System that ensures representation of individual Members for Parliamentary Constituencies, with mechanisms for proportionality’. This vital commitment, which would have done much to restore the effectiveness of Parliament and also limit corruption, was the principal victim of Ranil Wickremesinghe’s utter contempt for the cardinal commitments on which Sirisena had won election.
In the context of such forgetfulness, it was no surprise that the National Audit Bill and the Right to Information Bill were not put to Parliament in February. What Ranil was up to instead became clear when news broke of what became known as the Central Bank Bond Scam.
The mechanism to rob the country of billions was simple. Arjuna Mahendran, whom Ranil appointed as Governor of the Central Bank, interfered egregiously with a bond issue by the bank, which was decided upon on February 27th. The bank had advertised the sale of Rs 1 billion in bonds and, to quote from the current article on Mahendran in Wikipedia, the ‘majority of bidders, 26, bid for Rs. 100 million or less at a rate of 9.5%–10.5%. However, a few bidders, including Perpetual Treasuries Limited, wanted interest rates of 11%–12%. On 27 February 2015 the CBSL accepted Rs. 10 billion in bids at rates of 9.5%–12.5%. The issuing of ten times the advertised bonds, and at a higher than expected rate, was alleged to cost the Sri Lankan government an additional Rs. 40–45 billion ($300–$340 million). Perpetual Treasuries was issued, directly and indirectly, with Rs. 5 billion in bonds at 12.5%. Perpetual Treasuries was one of the primary dealers in the sale and is owned by Mahendran’s son-in-law Arjun Aloysius.
When this outrage was raised in Parliament, the Prime Minister, in a speech that denigrated the capacity of Members to look into such matters, announced that he would appoint a committee of lawyers to investigate. He appointed members of the UNP, but even they, though they declared that there was no direct involvement by Mahendran in the deal, noted that there was need of further investigation. Ranil however suppressed the report, hoping perhaps that Parliament would be dissolved in April, and the matter could be swept under the carpet.
What was obvious was that Ranil was directly involved. Indeed he asserted, and Mahendran confirmed this, that it was the Prime Minister who had instructed that bonds should be issued through public auctions. They made much of the fact that Nivard Cabraal, the previous Governor, had issued bonds on what they termed private placements, which they claimed was corrupt practice.
The respected former Deputy Governor of the Central Bank, W A Wijewardene, who had been critical too of Cabraal’s management, made it clear that going only by auctions was problematic, because obviously dealers would bid at high interest rates. What most countries did was to fix interest rates through auction for small amounts, and then place other bonds direct, by offering them to dealers at the rate that had been fixed through the auction. Cabraal indeed noted that his practice was to offer bonds at a little bit less than what the auction had established, and he had thus managed to keep interest rates low.
This practice had been challenged previously by the former banker Eran Wickramaratne, who was one of the most dedicated members of the Committee on Public Enterprises, on which I also served. His claim was that the practice of private placements took advantage of captive sources of funds, such as the Employee Trust Fund, which therefore got less interest than they might have done on the open market.
I could understand Eran’s perspective, though I felt that Wijewardene’s approach was more sensible since it was incumbent on public officials and institutions to keep as low as possible the cost of public borrowing. But what Eran too granted was completely wrong was to issue bonds in a hole and corner fashion, offering a small amount and then accepting bids far in excess of the amount offered.
What was never explained by either Ranil of Mahendran was whether the orders to go strictly by auction also included the order to suddenly insist on taking much more than had initially been auctioned, and in a scenario when this meant a massive increase in interest rates.
When finally COPE was asked to look into the matter, after Ranil had been compelled to table the report of his lawyers in Parliament, we were told that Mahendran had, unprecedentedly, gone down to the Dealers’ floor twice. After initially asking that 20 million of bonds be issued, he had then, when the Dealers objected, insisted that they take 10 million. The officials we questioned were obviously deeply upset, and when we asked why they had not objected to this latter too, they said they had done so. It was clear that they had been forced to this step by the Governor, though it was argued by the Prime Minister’s agents on COPE that he had simply suggested this to them. But continuous pressure of this sort, involving intrusion while the bids were being evaluated, was obviously difficult to resist.
The rank dishonesty of what had occurred was the more obvious in that the chief beneficiary of this bullying was Perpetual Treasuries, a company in effect owned by Mahendran’s son-in-law. To make matters worse, he had financed the deal through the Bank of Ceylon, which was also a primary dealer, and could have bid on its own account had it thought such a large number of bonds would be issued at such high interest rates. The manner in which the Bank had agreed to finance the deal was also remarkably suspicious. Needless to say, Perpetual Treasuries had promptly sold off the bonds they had thus acquired at a massive profit.
Typically, the UNP cheerleaders tried to attack Cabraal even on this issue, claiming that Perpetual Treasuries had benefited from bond issues during his tenure. But in a spirited defence Cabraal pointed out that they had received hardly any bonds in his time, and their portfolio had increased by leaps and bounds after Mahendran took over.
Maithripala Sirisena was obviously disturbed by this, but he took no action, and in fact he gave a lifeline to Ranil by dissolving Parliament to prevent the COPE report that was being prepared in June being issued. Why he did this needs to be explored further, but it should be noted that a year later he made some amends for what was in effect support for a crooked deal by refusing to reappoint Mahendran despite Ranil’s desire that he do so.
The matter seemed to me a sort of litmus test, and had Sirisena failed, I would have had to rethink the correctness of the decision I had made in supporting him at the Presidential election. But he did pass, which allowed for renewed hope that he would make an effort to fulfil at least some of the ideals he had expressed, including his desire for electoral reform, which he too has now realized is essential if we are to reduce corruption in politicians.
All this however was in the future, and it was only after the COPE investigation that I realized exactly how disgracefully Ranil had behaved. This also came as a personal shock, because previously I had thought of him as an honest politician. During his previous tenure in office I had realized that he actively countenanced corruption, the then editor of the Sunday Times, a strong UNP supporter, having confirmed that, with a very few exceptions, the Cabinet was hopelessly corrupt – and worst of all it seemed were the members handpicked by Ranil. But he had noted that Ranil himself, along with Karu Jayasuriya and the idealistic Karunasena Kodituwakku, were not at all corrupt and, given family connections, I felt relieved that Ranil was not lumped in with the rest.
But in 2015 it was clear that he was behind the deal that Mahendran had put through. It would not do to give him the benefit of the doubt and say that he had meant only that all bonds should be by auction, with the amount to be disbursed being advertised. If that was the case, he would not have defended so assiduously Mahendran’s chicanery in only advertising a billion and taking ten times as much.
By March then it seemed that it would be best to wash my hands of the government, given that one of the principal reasons for my having supported its formation was perceptions of corruption in the Rajapaksa government. Besides it was clear that those I had relied on, such as Karu Jayasuriya, would do nothing. He still had my affection, since he kept saying, when I suggested measures he could take as Minister for Democratic Governance, that his hands were tied. But it was depressing that he would not even make an effort.
Given then that the reforms I had pressed for were not forthcoming, given the increasing evidence of corruption, and given too that Ranil lied to the House and claimed that there had been no resignation, I decided it was necessary to take a public stand. When I upbraided Ranil about his lie, he gave his usual cynical smile, and said that the President had not accepted my resignation, so therefore I had not resigned. But given that the constitutional provision is quite clear, that a Minister resigns by handing over a letter of resignation, and given that, though asked to stay on, I had indicated a final date in that letter after which I would vacate office if my concerns were not addressed, I thought there was no ambiguity about the fact that I was no longer the State Minister for Higher Education.
And then, when a bundle of correspondence was brought to my residence, nothing having been done in the month and more since I had resigned, it was clear that a dramatic step was required to set the record straight. So on March 17th, I announced that I had resigned, and crossed the floor of the House.
Ceylon Today 17 Jan 2017 – http://www.ceylontoday.lk/print20170101CT20170331.php?id=13214